BETWEEN:
and
____________________________________________________________________
Appeals heard on November 23, 2006, at Edmonton, Alberta, by
The Honourable Justice Campbell J. Miller
Appearances:
____________________________________________________________________
JUDGMENT
The appeals from reassessments of tax made under the Income Tax Act for the 2003 and 2004 taxation years are dismissed.
Signed at Ottawa, Canada, this 1st day of December 2006.
BETWEEN:
BRIAN J. KASH,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
[1] Mr. Kash appeals by way of the informal procedure the assessment from the Minister of National Revenue (the Minister) of his 2003 and 2004 taxation years, in which the Minister denied Mr. Kash's claims for the disability tax credits. Mr. Kash had successfully claimed the disability tax credit in years prior to 2003 on the basis of suffering from celiac disease. Applicable to 2003 and the years following, the disability tax credit legislation was amended by the Government of Canada. The Minister has determined that based on the new legislation, Mr. Kash no longer qualifies for the disability tax credits.
[2] The issues raised by the parties are:
(i) Does the concept of issue estoppel apply to vacate the Minister's assessment denying Mr. Kash the disability tax credits in 2003 and 2004?
(ii) Is the effect of the legislative amendments applicable to 2003 and the years following to render ineligible those suffering from celiac disease from obtaining a disability tax credit, by providing relief to such individual under the medical expense tax credit?
(iii) Is Mr. Kash's ability to perform the basic activity of daily living of eliminating (bowel or bladder functions) markedly restricted? This question is addressed by determining whether substantially all of the time Mr. Kash requires an inordinate amount of time to perform that basic activity of daily living. A related issue is whether a doctor's certificate is conclusive in this regard.
Facts
[3] Mr. Kash suffers from celiac disease. He testified that there are degrees of severity of this disease, and that he believes, on the advice of his physician, that he suffers a severe case. Any minor exposure to gluten could result in one to four days of acute diarrhea (20 visits a day to the washroom) making it impossible to carry on normal daily activities. This can lead to lingering dehydration. He can take medication, but a side effect of such medication is constant and severe vomiting.
[4] Mr. Kash manages this problem by diet. He is very strict about the regime he follows. He takes all necessary steps to avoid gluten by carefully buying and preparing only certain foods. This attention to detail takes time, but allows him to manage his disease, specifically controlling his bowels.
[5] Prior to 2003, Mr. Kash applied for and received the disability tax credit on the basis that his marked restriction of a basic activity of daily living was with respect to feeding himself. For 2003 and 2004 (and also 2005, although that year is not before me), he claimed the disability tax credit on the basis that the restriction was with respect to the basic activity of eliminating (bowel and bladder functions). His doctor, Dr. Schubert, provided the necessary form which stated:[1]
Elimination (bowel or bladder functions)
Your patient is considered markedly restricted in elimination if, all or substantially all the time, he or she:
is unable to personally manage bowel or bladder functions, even with appropriate therapy, medication, and devices; or
requires an inordinate amount of time to personally manage bowel or bladder functions, even with appropriate therapy, medication, and devices.
Notes:
· Devices for elimination include catheters, ostomy appliances, etc.
· An inordinate amount of time means that personally managing elimination takes significantly longer than for an average person who does not have the impairment.
Samples of markedly restricted in elimination (examples are not exhaustive):
Your patient needs the assistance of another person to empty and tend to his colostomy appliance on a daily basis.
Your patient is incontinent of bladder functions, all or substantially all the time, and requires an inordinate amount of time to manage and tend to her incontinence pads on a daily basis.
Is your patient markedly restricted in elimination, as described above?... yes [√]
Year
If yes, when did your patient's marked restriction in elimination begin? [1996]
In a follow-up letter dated July 14, 2005, Dr. Schubert wrote:[2]
Re: Disability Tax Credit application for Brian J. Kash
To Whom It May Concern:
I have read your letter to Mr. Kash dated July 7, 2005, wherein you indicate that the reason he would not be eligible for the DTC is because:
Your restriction in personally managing your bowel and bladder functions is not present all or substantially all of the time.
I can confirm that restriction in the management of his bowel and bladder function is present all of the time. Mr. Kash's condition is permanent and his restriction in management is present at all times and requires him an inordinate amount of time to manage.
Finally in response to a Canada Revenue Agency (CRA) questionnaire, Dr. Schubert responded:[3]
Elimination:
Can your patient personally manage his or her bowel and/or bladder functions using, as needed, any therapy, appropriate devices, or medication?
Yes √
For the year(s) you stated above, was this the case all or substantially all of the time?
Yes √
When your patient is able to personally manage his or her bowel and/or bladder functions, does your patient require an "inordinate amount of time" to manage this activity?
Note: To meet the requirement for an "inordinate amount of time", the activity must take significantly more time than would be taken by an average person who does not have the impairment.
Yes √
If yes, please give the year (s) for which this was the case.
Ever since late 1995/early 1996
For the year(s) you stated above, was this the case all or substantially all of the time?
Yes √
If applicable, please explain the type and frequency of assistance that your patient requires to manage his or her bowel and/or bladder functions. Despite close attention to his diet, at times he may accidently consume some food with gluten - he will then have several days of severe diarrhea.
[6] It is clear from Mr. Kash's evidence and Dr. Schubert's responses that the inordinate amount of time they refer to is the time taken to control the diet, which allows Mr. Kash to manage the performance of his bowel function.
[7] Effective in 2003, the Income Tax Act was amended by adding paragraph 118.2(2)(r) which reads:
For the purposes of subsection (1), a medical expense of an individual is an amount paid
...
(r) on behalf of the patient who has celiac disease, the incremental cost of acquiring gluten-free food products as compared to the cost of comparable non-gluten-free food products, if the patient has been certified in writing by a medical practitioner to be a person who, because of that disease, requires a gluten-free diet;
and paragraph 118.4(1)(e):
For the purposes of subsection 6(16), sections 118.2 and 118.3 and this subsection,
...
(e) feeding oneself does not include
(i) any of the activities of identifying, finding, shopping for or otherwise procuring food, or
(ii) the activity of preparing food to the extent that the time associated with the activity would not have been necessary in the absence of a dietary restriction or regime; and ...
Analysis
(i) Does the concept of issue estoppel apply to vacate the Minister's assessment denying Mr. Kash the disability tax credits in 2003 and 2004?
[8] Mr. Kash referred me to the case of Leduc v Canada[4]where Justice Lamarre stated at paragraph 45:
In the present situation, the Act gives the Minister the authority to determine a taxpayer's tax for each taxation year. However, while the legal rule is the same from one year to the next, the annual authority set out in the Act to determine that tax does not necessarily mean, in my view, that there cannot be identity of cause from one year to the next if the legal characterization of the facts alleged is identical. In the instant case, it is my opinion that the essence of the legal characterization of the facts alleged in the judgment of November 5, 1999, granting the appellant entitlement to the credit provided for in sections 118.3, 118.4 and 118.8 of the Act, in accordance with the legal rule applicable in 1997, is identical under the legal rule applicable in 1999. ...
Unfortunately for Mr. Kash he is not at all in the same position as that considered by Justice Lamarre. Firstly, and essential for a finding of issue estoppel, there must be a prior judicial determination, which there was in Leduc (see also the case of Ahmad v. R.).[5] Mr. Kash has never before had his disability tax credit matter considered by the Courts.
[9] Secondly, Justice Lamarre specifically indicates that the legal characterization of the facts in accordance with legal rules in 1997 is identical under the legal rules applicable in 1999. In Mr. Kash's case, the legal rules have changed from 2002 to 2003. For these reasons, the principles of issue estoppel are not available to Mr. Kash. It is in order for this Court to consider the application of the disability tax credit rules in 2003 and 2004 to Mr. Kash's situation, notwithstanding assessments of prior years allowing the disability tax credit.
(ii) Is the effect of the legislative amendments applicable to 2003 and the years following to render ineligible those suffering from celiac disease from obtaining a disability tax credit by providing relief to such individual under the medical expense tax credit?
[10] Some background is in order. Prior to the legislative amendment cited earlier, there were several cases before the Court dealing with individuals suffering from celiac disease. The cases went both ways. In 2002, the Federal Court of Appeal in the Hamilton v. R.[6] decision decided the following:
To summarize, persons with celiac disease or other medical conditions that impose dietary restrictions are eligible for the disability tax credit if, but only if, they can establish by evidence that they require an inordinate amount of time to find, procure and prepare foods that can safely be eaten.
[11] Shortly thereafter the Government of Canada introduced the amendments to the Act. The amendments address the Hamilton situation of an individual claiming the disability tax credit based on requiring an inordinate amount of time feeding himself, arising from shopping for food and preparing food. The Respondent argues that the effect of allowing, to an individual suffering from celiac disease, the costs of acquiring gluten-free food products compared to non-gluten-free food products as a medical expense under the new legislation, combined with removing from the definition of "feeding oneself" the activities of shopping for and preparing food, clearly suggests a complete regime for dealing with medical related credits for such an individual. Not so, says Mr. Kash. He argues the amendments relate only to the basic activity of feeding oneself and cannot be taken to preclude him from proving that he requires an inordinate amount of time to perform a different basic activity of daily living connected to the disease. Certainly it would be an overly restrictive approach to deny Mr. Kash a disability tax credit if the celiac disease resulted in the loss of a basic activity such as walking. The obvious difference, however, is that the basic activity of walking is not impacted by the very same activities of shopping and preparing food that require an inordinate amount of time for feeding oneself. It is those very same activities of shopping and preparing food that are removed from the definition of feeding oneself, that are now relied upon by Mr. Kash to prove the marked restriction of eliminating (bowel and bladder functions).
[12] I do not go as far as the Respondent suggests that the amendments create a complete regime. The more specific question is whether, by deleting the action of shopping for and preparing food from one activity (feeding oneself) implicitly removes time taken to perform those actions from any other basic activity of daily living. In looking at the other activities, it is clear that eliminating (bowel and bladder functions) is the only other basic activity of daily living to which these actions could possibly pertain. But from a common sense perspective, could one reasonably expect the legislators to consider shopping for and preparing food as part of the activity of eliminating (bowel and bladder functions). I find that shopping for and preparing food does not, on any reasonable interpretation, constitute part of the basic activity of eliminating (bowel and bladder functions). Mr. Kash's position is that the test is not an inordinate amount of time to perform the basic activity of eliminating, but to manage the performance of the activity: he takes an inordinate amount of time in managing the problem. While I disagree with this approach, I will address it further in dealing with the final issue.
(iii) Is Mr. Kash's ability to perform the basic activity of daily living of eliminating (bowel or bladder function) markedly restricted?
[13] I will first consider Mr. Kash's position that a doctor's certificate is conclusive proof of the marked restriction of the basic activity of daily living. Mr. Kash relies on Chief Justice Bowman's comments in Noaille v. Canada[7] in putting forth this proposition. Chief Justice Bowman felt compelled to follow the Federal Court of Appeal decision in MacIsaac v. R.[8]. My reading of MacIsaac is that the Federal Court of Appeal made it clear that a taxpayer must provide a doctor's certificate in order to be eligible for the disability tax credit. But this is quite different from saying every taxpayer who files a doctor's certificate is entitled to the disability tax credit. If you do not file a doctor's certificate, you will not get the credit, is not the same as saying that if you do file a doctor's certificate you do get it. It is still for this Court to consider the circumstances, including whether there is a doctor's certificate, and determine if legally there is a marked restriction of a basic activity of daily living. Without a certificate we need not deliberate further (MacIsaac), but with a certificate we must then deliberate: we should not simply accept the certificate as conclusive. This is supported by the very structure of section 118.3 which requires a finding of an impairment, a finding of a marked restriction and a doctor's certificate.
[14] So, I have Dr. Schubert's certificate. The section on elimination set forth in paragraph 5 gives some guidance to physicians by providing a couple of examples of what constitutes a marked restriction (tending to a colostomy appliance and daily attending to incontinence pads). These actions are directly related to the actual act of elimination, and I would certainly distinguish them from shopping for and preparing food. Yet, the form also talks in terms of personally managing the activity. As indicated, Mr. Kash takes that to mean the overall management of the diet with its consequent effect on elimination. By "managing" a diet, and taking time to do it, he argues that he is spending an inordinate amount of time on managing the basic activity, which is the test he claims is set out in the doctor's certificate. The wording of the certificate is unfortunate. The actual legislation itself is not written in terms of managing performance: it is simply written in terms of "an inordinate amount of time to perform". While I certainly understand Mr. Kash's broader interpretation of the certificate, I find it is not the correct interpretation. It is not an interpretation supported by the words of the legislation. The inordinate amount of time must relate directly to the basic activity. Until the legislative amendments, the basic activity of feeding oneself included shopping for and preparing food (Hamilton). So time taken to shop and prepare food was directly related to the basic activity; it was indeed part of the basic activity. I find that while shopping for and preparing food are elements of controlling the diet which manages the elimination problem, they are not activities directly related to the basic activity of elimination (bowel and bladder functions).
[15] Mr. Kash, relying on Chief Justice Bowman's approach in Radage v. Canada,[9] asks me to interpret these provisions liberally and humanely to grant the relief intended to those such as him dealing with this, at times, debilitating disease. It would stretch my understanding of a liberal interpretation just too far to find Mr. Kash's time spent on shopping for and preparing food is time spent on performing the basic activity of elimination.
[16] I find the legislative amendments provide some tax relief to those such as Mr. Kash, but that relief is not found in the disability tax credit provisions. For these reasons I dismiss Mr. Kash's appeals.
Signed at Ottawa, Canada, this 1st day of December 2006.
"Campbell J. Miller"
Miller J.
COURT FILE NO.: 2006-1122(IT)I
STYLE OF CAUSE: Brian J. Kash and Her Majesty The Queen
PLACE OF HEARING: Edmonton, Alberta
DATE OF HEARING: November 23, 2006
REASONS FOR JUDGMENT BY: The Honourable Justice Campbell J. Miller
DATE OF JUDGMENT: December 1, 2006
APPEARANCES:
|
For the Appellant: |
The Appellant himself |
|
Counsel for the Respondent: |
Tyler Lord |
COUNSEL OF RECORD:
Firm: N/A
For the Respondent: John H. Sims, Q.C.
Deputy Attorney General of Canada
Ottawa, Canada